How To Run A Restaurant: External Threats

Every new business owner needs to know the fundamentals. Forbes.com is breaking down those building blocks by answering eight core questions related to a given industry. Taken together, the information will give budding entrepreneurs a head start on making those first critical steps.

What is the biggest external threat to my business?

No, it's not the industrial-strength
Applebee's
or
Ruby Tuesday
moving in down the block. (If anything, they help drive traffic to your joint.) The biggest threat is the lack of capable--and affordable--workers.

For all the talk about the U.S. becoming an overly service-based economy, there still will be plenty of restaurant jobs to fill. While nearly 13 million people now work in the restaurant industry, analysts estimate that restaurateurs will need to add some 2 million jobs over the next decade--even as they cope with soaring health care costs, minimum-wage hikes and stricter immigration regulations.

Most restaurants don't offer much in the way of health benefits. Only 61% of employees in service industries such as restaurants are covered and most hourly paid restaurant workers don't have access to employer-provided coverage--not exactly a draw for talented workers. (Last year, the health-insurance costs rose 7.7%, lapping the rate of inflation.)

Now, Washington is inches away from raising the minimum wage by $2.10 to $7.25 per hour. That could hurt. In 2005, just 1.9 million people--or 2.5% of all hourly paid workers--made less than $5.15 per hour, according to the Bureau of Labor Statistics. But 75% of those 1.9 million are employed in service occupations, many in food preparation.

As for immigration reform, if hardliners in Congress have their way, it will be harder for foreign-born workers to enter, live and work in the United States. Restaurateurs lean on a large number of foreign-born workers--both in-house and indirectly via their suppliers in agriculture. According to the Pew Hispanic Center, nearly a third of the country's estimated 12 million undocumented workers hold jobs in the service industry.